If you are concerned about whether your verbal agreement is legally enforceable, contact a business attorney in Pittsburgh today.

Elements of a Binding Verbal Agreement in Pennsylvania

For a verbal agreement to be legally binding, it must meet the same fundamental criteria as a written contract. These elements include:

• Offer and Acceptance: One party must make an offer, and the other must accept it.
• Consideration: Both parties must provide something of value, whether it is a product, service, or money.
• Mutual Agreement: Both parties must clearly understand the contract terms.
• Capacity: Both parties must have the legal capacity to enter into the agreement. This includes being of sound mind and legal age.
• Legality: The subject of the agreement must be lawful. Verbal agreements involving illegal activities are not enforceable.

The Statute of Frauds in Pennsylvania

While verbal contracts can be binding, Pennsylvania law imposes certain restrictions on their enforceability through the Statute of Frauds under 42 Pa.C.S. § 725. This legal principle requires certain types of contracts to be in writing to be legally enforceable. The primary categories where a written agreement is required include:

• Real Estate Transactions: Any agreement involving the sale, transfer, or lease of real property for more than one year must be in writing.
• Sale of Goods Over $500: Under 13 Pa.C.S. § 2201 of the Uniform Commercial Code (UCC), any sale of goods exceeding $500 must be documented in writing.
• Contracts Lasting More Than One Year: If the contract cannot be fully performed within one year, it must be in writing to be enforceable.
• Promise to Pay Another’s Debt: Any agreement to pay the debt of another person must be in writing.

If a verbal agreement falls within any of these categories, it is not legally binding unless it is written and signed by both parties.

Challenges in Enforcing a Verbal Agreement

Even when verbal agreements meet the necessary legal criteria, enforcing them can be more difficult than enforcing written contracts. For most oral contracts to hold up in court, the party seeking enforcement will need to provide evidence such as:

• Witness Testimony: If any third party was present during the agreement, their testimony may be required.
• Actions of the Parties: Evidence of the parties’ actions following the agreement, such as payment records, services rendered, or partial performance, can help demonstrate the existence of the contract.
• Text Messages or Emails: In modern times, digital communication such as emails or texts confirming the agreement can also be used as supporting evidence.

Exceptions to the Rule

There are certain exceptions where Pennsylvania courts may enforce verbal agreements that otherwise fall under the Statute of Frauds. One such exception is partial performance. If one party has already partially fulfilled their obligations under the agreement, the court may enforce the verbal contract to prevent unfair outcomes, even if it would normally need to be in writing.

Example Scenarios to Show How PA’s Statute of Frauds Impacts Verbal Agreements

Scenario 1: Verbal Agreement for Real Estate Transaction

Facts: John and Mary verbally agree on the sale of John’s house to Mary for $300,000. They shake hands and agree that the sale will be completed in six months. No written contract is drafted.

Application of the Statute of Frauds: Under 42 Pa.C.S. § 725, a contract for the sale of real estate must be in writing to be enforceable. In this scenario, the verbal agreement would not hold up in court if either party decided not to proceed, because it falls under the Statute of Frauds' requirement for written contracts concerning real estate transactions.

Result: If John, the property owner, later decides not to sell the house, Mary cannot enforce the agreement since there is no written contract, and the sale of real estate falls under the statute.

Scenario 2: Oral Agreement for Sale of Goods Over $500

Facts: Emily runs a small business and verbally agrees to buy 10,000 custom-printed T-shirts from Bob for $100,000. Bob begins the production but does not provide a written contract to the other party.

Application of the UCC: Under 13 Pa.C.S. § 2201, any contract for the sale of goods priced at $500 or more must be in writing to be enforceable. The verbal agreement between Emily and Bob is insufficient for legal enforcement under this provision.

Result: If Emily refuses to pay for the T-shirts after delivery, Bob cannot enforce the agreement in court citing fraudulent claims because there was no legally binding contract in writing, as required for goods over $500 in Pennsylvania.

Scenario 3: Partial Fulfillment of a Verbal Contract for a Project

Facts: Accel Construction Company verbally agrees with John, a homeowner in Pittsburgh, to build a custom home for $150,000. They discuss all project details over several meetings, and John expresses his excitement about the project. Accel Construction begins work without drafting a written contract. After completing the foundation and framing of the house, Accel Construction receives $75,000 from John. However, halfway through the project, John decides he no longer wants the house built and refuses to pay the remaining balance.

Partial Fulfillment Exception: Under 42 Pa.C.S. § 725, contracts for the sale of real estate must be in writing to be enforceable. Although the verbal agreement may not meet the statute's requirements, the partial performance of the contract by Accel Construction could impact its enforceability. The substantial work already completed, combined with the significant payment received, demonstrates that a contract existed.

Result: In this scenario, despite the lack of a written contract, Pennsylvania courts may enforce the agreement based on the principle of partial fulfillment. 

Choose Very Law for Legally Sound Business Agreements in Pittsburgh, PA

At Very Law, Pittsburgh business attorney Ryan D. Very, Esq. emphasizes the importance of a well-structured written business agreement. Our team is committed to ensuring that your contracts are comprehensive, legally sound, and crafted to your specific needs. By working closely with you, we can identify potential risks and incorporate necessary provisions that protect your interests. We have the legal knowledge and experience to ensure legal compliance of your business agreement under Pennsylvania laws, minimizing the likelihood of future disputes and misunderstandings.

Legal Representation in Breach of Contract Cases

When a breach of contract occurs, it can have financial and operational consequences for your business. Having a knowledgeable attorney by your side is helpful to protect your rights and interests. Ryan D. Very and his legal team at Very Law are prepared to represent your interests aggressively in these cases.

We start by conducting a comprehensive analysis of your case, examining the contract’s terms, the obligations of each party, and the circumstances surrounding the breach. Our team will gather relevant evidence, such as communications, documents, and witness testimony, to prove that the other party violated the contract and is responsible for damages.

With this solid foundation, we will develop a legal strategy in accordance with your goals. Whether we pursue a negotiated settlement to avoid prolonged litigation or take your case to court, we will strongly represent your position in all situations, seeking damages, enforcement of contract terms, or even contract cancellation, depending on your goals and the facts of the case.

Protecting Your Interests in Business and Commercial Deals

At Very Law, we pride ourselves on client-focused representation. Our commitment to transparency and personalized communication ensures that you feel supported throughout the legal process. Trust Ryan D. Very, Esq. to protect your business interests and handle the complexities of contract law with skill. To schedule a confidential consultation, call us at 412-424-6199 or contact us online.